For the foreseeable future, depreciation will not be your concern, but vehicle supply will be. Try reaching out to new car dealers who are trying to meet their stair incentive goals or explore new sales channels such as the Facebook Marketplace to replenish the rental supply.

Photo via Helgi Halldórsson from Flickr via Flickr2commons

In June, prognosticators predicted that the volume of new car supply would correct by the second quarter of 2022. In August, the forecast was pushed back to 2023. These same people say today that 2023 is not that the beginning of the day, and that The real normal will not arrive before 2025. Fleet allocation for rental cars? The majors will be lucky in 2022 with more than 25% of a normal year. Someone else, fuhgeddaboudit.

Human nature has a way of underestimating the magnitude of things at the start of a crisis. Remember last March when we thought the pandemic would end in August?

Here’s what’s happening now: OEMs no longer have rental programs. Banks are getting nervous about financing vehicles that cost $ 3,000 more per unit than normal. Orders are pouring in, but only if you placed them earlier in the year. And these orders are not guarantees – many are canceled outright.

What do independent rental companies and franchisees say? Here is a summary of quotes from the field:

  • “We can’t get factories to talk to us right now. “
  • “I have almost zero confidence in my orders for 2022. I think I’ll have a good deal of it, but what will happen exactly? This is the challenge.
  • “We pay cash for the cars. Lenders don’t finance.
  • “Every dealer in town knows I’ll pay the sticker and my phone never rings. “
  • “Most of my fleet is now worth more than what I paid for it in April and May. But then what, I can’t replace it.
  • “I literally said to a representative ‘I’ll buy whatever you have available for whatever you want to charge me for.’”
  • “Buy any new vehicle you can get your hands on. Don’t think, don’t wait, don’t breathe. Just say yes. Or give them my number.

For anyone selling a car, there is a silver lining: With the Manheim index now at 204.8, used car prices have officially touched the sun. But who can afford to sell right now?

The continued shortage of chips and supply chain issues mean the value of used cars will remain high until at least 2023. It’s a boost for your P&L, but now is not the time to sit down on your traditional customer base and take advantage of those astronomical rates.

What you can do

Smart car rental operators are finding creative solutions for finding cars and exploiting new business opportunities emerging from the disruption. Here are some action items to consider:

As new car dealers have funneled everything that has four wheels into retail, including their loaner fleet, they are in desperate need of loaner cars. This presents opportunities for local rental companies: develop relationships now with your local dealers for lending activities, even if it is only for a few cars. Treat these resellers well and they will remember you under normal circumstances.

Car rental companies with seasonal activities have a fleet that they would normally have sold during the fall and winter. The tailings will be solid enough to pay for parking and depreciation until next spring while making a profit on these units.

  • Recapture hailing customers

Remember when car rental lost short-term business to Uber and Lyft, which offered cheap subsidized rides and a 10-minute car, anywhere, anytime? Running out of the pandemic experienced a slower return than other travel verticals. Prices are high and drivers are scarce. Car rental takes up a good part of this activity. See how you can win back this market.

New car dealers are diverting their fleet inventory to retail buyers, it’s true. Still, consider stepped programs, in which OEMs incentivize dealers to meet their sales targets. These unit incentives are substantial and are often retroactive year round.

Talk to dealers at the end of the month when they are looking to meet their goals. Sign up on their waiting lists. If they can unload a handful of units all at once to earn up to $ 800 more on each car, that’s the definition of win / win.

  • Explore new sales channels

In some segments, especially passenger vans where there is hardly any new stock, the prices of used units are actually higher than new ones. In this new reality where all bets are off, it’s time to rethink the old sources of sales.

Some small operators are successful in buying from Enterprise Car Sales to replenish their fleets. They find that Enterprise’s retail prices for used rental units are, in fact, lower than what they would pay at auctions.

Car dealers are sourcing more than ever from the Facebook marketplace. Do the same – browse Facebook and Craigslist and rate these cars for your rental fleet. These salespeople will take over the book for the car and you will both be happy.

Remember the surge in guaranteed reservations in car rentals a few years ago? The industry traditionally suffers from a no-show rate of 20-30%. With a limited supply, that is about to change.

In 2019, prepaid only represented around 10% of bookings for brands in the NP Franchise group (Nextcar, Priceless and Rent-A-Wreck). They report today that prepaid now constitutes more than half of their reservations.

Find out how you can market prepaid to your loyal customers. Give them a small discount, offer them a car warranty, and then enjoy the operational benefits of greater safety in use.

Have you recently ordered via a QR code in a restaurant? Do you think we will come back to plastic menus? This mindset leads to car rental. Don’t give up on your plans to instill greater efficiency in your process.

New keyless technologies allow operators to rent out of hours as well as place rental cars in hotels, body shops and dealerships without additional staff. Remember, we are also in a labor shortage.

With the world opening up to travel again – and the affordability of new vehicles at an all-time high – car rental is back in high demand. Make sure you engage your customers where they want to be met, in the most effective way possible.

Author

Chris Brown

Chris Brown is the editor of Business Fleet, Auto Rental News and Fleet Forward. Through these publications and related business events, Chris covers all aspects of the fleet world including fleet management, the new mobility ecosystem, manufacturer fleet operations, the fleet rental industry, vehicle remarketing and rental industry news.

See the biography

Chris Brown is the editor of Business Fleet, Auto Rental News and Fleet Forward. Through these publications and related business events, Chris covers all aspects of the fleet world including fleet management, the new mobility ecosystem, manufacturers’ fleet operations, the fleet rental industry, remarketing of vehicles and news from the rental industry.

See the biography

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